Berkshire has previously made clear that Buffett's role as chairman will be filled by his son Howard and that his investment responsibilities for the company's massive investment portfolio will be split among several money managers -- having brought on hedge fund managers Todd Combs and Ted Weschler over the last year-plus. In the 2011 letter, Buffett writes that the companies board is:

enthusiastic about my successor as CEO, an individual to whom they have had a great deal of exposure and whose managerial and human qualities they admire. (We have two superb back-up candidates as well.)

Ajit Jain, who leads Berkshire's reinsurance operations, and Matt Rose, who runs railroad Burlington Northern Santa Fe, have been rumored as leaders in the clubhouse to succeed Buffett as CEO. While Jain is considered the favorite by many, both would seem to fit the description in the letter. (Another potential successor, David Sokol, resigned last year amid questionable investments in shares of Lubrizol shortly before it was acquired by Berkshire.)

The rest of the good news in Buffett's letter involved the strong operating performance of the company's five largest businesses -- BNSF, Iscar, Lubrizol, Marmon Group and MidAmerican -- which earned more than $9 billion in pre-tax profits for the year combined. On the investment side, Buffett highlighted the $5 billion in preferred securities of Bank of America he made in August, which looked dicey as the bank's common shares tanked in late 2011 but has been looking better with the stock leading the market this year. He also mentioned the purchase of a $10.9 billion stock in IBM, marking a 5.5% stake in Big Blue that joins other major positions like 13% of American Express, 8.8% of Coca-Cola and 7.6% of Wells Fargo.

Dividends alone from that "Big Four," Buffett notes, would have totaled $862 million if Berkshire held the positions for all of last year. That figure will likely grow in 2012, as Coca-Cola has already announced a dividend hike for the 50th consecutive year.

It wasn't all good news in 2011 though, Buffett admits, highlighting mistakes like bond holdings in Energy Future Holdings that have taken a loss because of stubbornly low natural gas prices. Meanwhile, Swiss Re, Goldman Sachs Group and General Electric repurchased stakes owned by Berkshire Hathaway for $12.8 billion. The result was $1.2 billion in pre-tax earnings, but replacing the income generated from the investments is no small tax, even though the Lubrizol acquisition helped.

Perhaps the biggest mistake Buffett copped to in his letter was being "dead wrong" about a housing recovery. "Housing will come back -- you can be sure of that," Buffett writes, but his bet on five businesses directly tied to residential construction was weaker than he hoped.

As for the year ahead, Buffett says he and Charlie Munger, his long-time partner and Berkshire's Vice Chairman, are focused on building earnings. Given the challenges of boosting profits at such a large enterprise, acquisitions will be part of the equation. "We now have eight subsidiaries that would each be included in the Fortune 500 were they stand-alone companies," Buffett writes. "That leaves only 492 to go. My task is clear, and I'm on the prowl."